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Existing and Emerging Privacy-based Limits In Litigation and Electronic Discovery

posted by:Alex Cameron // 11:59 PM // August 28, 2007 // ID TRAIL MIX

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Privacy law is increasingly important in litigation in Canada. Contemporary litigants routinely file requests for access to their personal information under PIPEDA and its provincial counterparts. Such requests can give a party a partial head-start on litigation discovery, or aid a party in rooting out information held by an opponent or potential opponent.

That said, with some possible room for improvement (at least in the case of PIPEDA), [1] data protection law in Canada takes a relatively hands-off approach when it comes to legal proceedings. Parties in legal proceedings are generally required to disclose information in accordance with long-standing litigation rules and are largely exempted from restrictions that might otherwise be applicable under data protection laws in other contexts. Yet, this does not mean that privacy considerations are not relevant or applicable to discovery in legal proceedings. This short article identifies some existing and emerging privacy-based limits in litigation discovery at the intersection between privacy interests and the need for full disclosure in litigation.

I. The Implied Undertaking Rule

As a starting point, it is important to note that privacy protections are built into discovery at a fundamental level. Information obtained through discovery is generally subject to an implied undertaking of confidentiality. This prohibits parties from using or disclosing information obtained during discovery for purposes outside of the litigation. The implied undertaking rule is based on a recognition by Canadian courts of the general right of privacy that a person has with respect to his or her own documents. [2] Many Canadian decisions cite the English text Discovery by Matthews & Malek for the principle behind the rule:

The primary rationale for the imposition of the implied undertaking is the protection of privacy. Discovery is an invasion of the right of the individual to keep his own documents to himself. It is a matter of public interest to safeguard that right. The purpose of the undertaking is to protect, so far as is consistent with the proper conduct of the action, the confidentiality of a party’s documents. [3]

A party may apply for relief from the implied undertaking rule where a party's interest in using information outweighs the privacy interest protected or where the document is otherwise available. However, the courts do not take the principle of privacy behind the rule lightly, as such applications for relief are frequently denied, for example, on the basis that it would be “an unwarranted intrusion on [the party’s] privacy rights”. [5]

Privacy has similarly been invoked as a limitation in defining what is and is not reasonable in discovery. For example, in Fraser v. Houston, the court declined to order production of the plaintiff’s financial documents on the basis of privacy concerns, despite concluding that the documents had “at least marginal probative value” to an allegation of economic duress:

I am satisfied that this line of questioning, […] could result in a detailed exploration of a man’s state of wealth or state of non-wealth as the case may be, and that that is a major invasion into a man's privacy which is generally only allowed in matters of execution on judgments that are not paid and perhaps, in some other circumstances. However, in the present case I am of the view that to allow an exploration of the nature that is requested by the defendants has a potential prejudicial effect upon Mr. Fraser's privacy which well outweighs any apparent probative value that there may be. [6]

Information potentially subject to disclosure in legal proceedings could be held directly by a party to the litigation or by a third party, such as an Internet service provider (ISP). In each of these categories, discussed in turn below, courts have balanced privacy considerations against the interests of full disclosure in litigation.

II. Information Held by a Party

A. Motions for Production

In Park v. Mullin, [7] a party applied for discovery of its opponent’s computer. Relying on earlier Supreme Court of Canada jurisprudence, Dorgan J. expressly drew on privacy considerations in refusing to order disclosure:

That the issue of privacy is a robust and real issue should be taken into account on an application such as this. In [A.M. v. Ryan, 1997 CanLII 403 (S.C.C.)], McLachlin J. commented on a party’s privacy interests in the context of an application for third party clinical records under Rule 26(11). […]:
... I accept that a litigant must accept such intrusions upon her privacy as are necessary to enable the judge or jury to get to the truth and render a just verdict. But I do not accept that by claiming such damages as the law allows, a litigant grants her opponent a licence to delve into private aspects of her life which need not be probed for the proper disposition of the litigation.
In my view, similar privacy concerns should be considered in a determination under Rule 26(10) where the order sought is so broad it has the potential to unnecessarily “delve into private aspects” of the opposing party’s life. [8]

Privacy also played an integral role in the leading case Desgagne v. Yuen [9], where the Court balanced the relevance of the information sought against other considerations, including privacy. The plaintiff had been injured in an accident, and the defendant sought production of her hard drive, Palm Pilot, video game unit, and photographs (both electronic and hard copies) taken since the accident. The plaintiff argued that the information was relevant since it would shed light on the defendant’s post-accident cognitive abilities and quality of life. Myers J. refused to order production of the plaintiff’s photographs because of privacy considerations:

In my opinion, the vacation photographs (and other photographs relating to the plaintiff’s family, friends and hobbies) sought have limited - if any - probative value on this matter. Production of these photographs, however, is invasive of the plaintiff’s personal life, because the photographs are largely of moments spent with her family and friends. The limited probative value considered against the invasiveness of production leads me to conclude that production of the photographs should not be ordered. [10]

Access to the plaintiff’s video game unit, Palm Pilot, and Internet Browsing history were also denied on the basis of their probative value being outweighed by the plaintiff’s privacy interest and the invasiveness of ordering their production. Similar reasoning was applied in Goldman, Sachs & Co. v. Sessions, [11] Ireland v Low [12], and Baldwin Janzen Insurance Services (2004) Ltd. v. Janzen. [13]

B. Motions for Preservation

In the context of preserving evidence for discovery, ex parte orders for the seizure of evidence (such as Anton Piller orders) allow litigation opponents access to documents that may contain personal or confidential information. Although such orders relate to the preservation of evidence, they form part of the overall process of document discovery. Given the invasiveness of such orders, privacy considerations can play an important role in Anton Piller cases. Courts urged taking a cautionary approach to Anton Piller orders as early as 1981. In the words of Browne-Wilkinson J. (as he then was) in Thermax Ltd v. Schott Industrial Glass Ltd: [14]

As time goes on and the granting of Anton Pillar [sic] orders becomes more and more frequent, there is a tendency to forget how serious an intervention they are in the privacy and rights of defendants. One is also inclined to forget the stringency of the requirements as laid down by the Court of Appeal. [15]

In Harris Scientific Products Ltd. v. Araujo, [16] the Court found that an Anton Piller order had been improperly obtained and improperly executed. The plaintiff had misrepresented a material fact in its application for the order, and the court found numerous and serious breaches of the order’s execution by the plaintiff. Two of the more serious breaches included the seizure of material subject to solicitor-client privilege and the seizure of an audio cassette that clearly had no relation to the proceedings (“a state-assisted major invasion of Mr. Araujo’s privacy on an unrelated matter”) [17]. When considering the quantum of damages to be awarded, the court reiterated how seriously such breaches of privacy are taken:

Damages for trespass resulting from a defective Anton Piller order should not be so low as to condone the wrongdoing; the use of state powers to breach an individual’s privacy must be jealously guarded. Even where the target of the order has suffered no, or little, in the way of pecuniary damage, the level of damages awarded can be more than nominal and can reflect mental distress. [18]

Finally, in CIBC World Markets v. Genuity Capital Markets, [19] an order in the nature of an Anton Piller order was made for full preservation of “computers, Blackberries and other types of similar electronic devices of every nature and kind” including all devices “owned or used by others including spouses, children or other relatives”. [20] An order for a seizure of this magnitude obviously has a broad privacy impact. However, the order provided that a technical consultant would perform the imaging and indexing of information and that the imaged drives and information would not initially be shared with the plaintiffs. [21] The court addressed the matters of relevance and confidentiality in a subsequent order, holding that if there were confidential or irrelevant documents contained in the devices imaged, then the defendants could apply to have the full index of documents sealed and one made public that only contained relevant material. [22]

IV. Information Held by a Non-Party

Privacy also plays an important role in contouring limits to discovery from non-parties in litigation. A great deal of personal information is held by non-parties such as ISPs and banks; it is increasingly sought out by parties in litigation.

In BMG v. Doe, [23] the Federal Court of Appeal considered an appeal by music providers who were seeking disclosure of the identities of customers alleged to have infringed copyrights by sharing music on peer-to-peer networks. Sexton JA, for the court, held that plaintiffs must conduct their initial investigations in a way that minimized privacy invasion; failure to do so could justify a court refusing to order ISPs to identify potential defendant customers as requested by the plaintiffs:

If private information irrelevant to the copyright issues is extracted, and disclosure of the user’s identity is made, the recipient of the information may then be in possession of highly confidential information about the user. If this information is unrelated to copyright infringement, this would be an unjustified intrusion into the rights of the user and might well amount to a breach of PIPEDA by the ISPs, leaving them open to prosecution. Thus in situations where the plaintiffs have failed in their investigation to limit the acquisition of information to the copyright infringement issues, a court might well be justified in declining to grant an order for disclosure of the user's identity. [24]

In other similar cases of discovery from non-parties, courts have relied on privacy as one of the key considerations factoring into whether production should be granted. For example, in Irwin Toy Ltd. v. Doe, [25] Wilkins J. provided the following view of privacy considerations: “some degree of privacy or confidentiality with respect to the identity of the internet protocol address of the originator of a message has significant safety value and is in keeping with what should be perceived as being good public policy.” [26] Although the court ordered the ISP to disclose the identity of the targeted ISP customer, it required the plaintiffs to meet a privacy-informed threshold test before disclosure would be granted.

Finally, discovery limits based on privacy considerations may also be developed after the fact, in the form of sanctions for wrongful behaviour. Where ex parte orders for evidence seizure (such as Anton Piller orders) are obtained or executed improperly in a way that has an impact on privacy, the courts may step in. This may result in the removal of the offending party’s counsel, or possibly even a stay of proceedings. For example, Grenzservice Speditions Ges.m.b.H. v. Jans [27] concerned an order in the nature of an Anton Piller order. The Court found that the plaintiff’s solicitor allowed flagrant abuses of privacy in the execution of that order, including questioning of the occupants of the home and videotaping of the proceedings surrounding the search. Because of the egregious nature of the infringement on the individual’s right to privacy, Huddart J. (as she then was) disqualified the plaintiff's counsel from further involvement in the case, in order to “assure the defendants and members of the public, all of whom are potential subjects of search and seizure orders, that their rights will be protected.” [28]

Conclusions

This article has briefly reviewed some of the rules and jurisprudence at the intersection between privacy and litigation discovery. Although data protection legislation has an impact on discovery, it generally leaves established litigation rules untouched. However, as seen in the cases reviewed here, there are a number of existing and emerging privacy-based limits on discovery in litigation. Conflicts between the need for full disclosure in litigation and privacy interests will certainly arise more frequently in light of the increasing prominence of electronic discovery and the increasing role that electronic devices play in the creation, processing and storage of personal information.


[1] Statutory Review of the Personal Information protection and Electronic Documents Act (PIPEDA), Fourth Report of the Standing Committee on Access to Information, Privacy and Ethics, Tom Wappel, MP, Chairman, May 2007, 39th Parliament, 1st Session, online: Standing Committee on Access to Information, Privacy and Ethics
(Recommendation 9: “The Committee recommends that PIPEDA be amended to create an exception to the consent requirement for information legally available to a party to a legal proceeding, in a manner similar to the provisions of the Alberta and British Columbia Personal Information Protection Acts.”)
[2] See Lac d'Amiante du Québec Ltée v. 2858-0702 Québec Inc., 2001 SCC 51 (CanLII) at para. 61.
[3] Paul Matthews and Hodge M. Malek, Discovery (London: Sweet & Maxwell, 1992) at 253, cited in Goodman v. Rossi, [1995] O.J. No. 1906 (C.A.) (QL) at para. 29. See also Tanner v. Clark, 2003 CanLII 41640 (ON C.A.); Royal Bank of Canada v. Bacon (1999), 218 N.B.R. (2d) 98 (Q.B.); Vitapharm Canada Ltd. v. F. Hoffmann-La Roche Ltd., [2002] O.J. No. 1400 (S.C.) (QL).
[4] Letourneau v. Clearbrook Iron Works Ltd., 2003 FC 949 (CanLII) at para. 5.
[5] Kunz v. Kunz Estate, 2004 SKQB 410 (CanLII) at para. 17. See also Letourneau v. Clearbrook Iron Works Ltd., ibid.; L. H. v. Caughell, [1996] O.J. No. 3331 (Ont. Gen. Div.); Sezerman v. Youle, 1996 CanLII 5610 (NS C.A.).
[6] Fraser v. Houston, 1997 CanLII 3227 (BC S.C.) at para. 21.
[7] Park v. Mullin, 2005 BCSC 1813 (CanLII).
[8] Ibid. at para 21.
[9] Desgagne v. Yuen, 2006 BCSC 955 (CanLII).
[10] Ibid. at para. 49.
[11] Goldman, Sachs & Co. v. Sessions, 2000 BCSC 67 (CanLII).
[12] Ireland v Low, 2006 BCSC 393 (CanLII).
[13] Baldwin Janzen Insurance Services (2004) Ltd. v. Janzen, 2006 BCSC 554 (CanLII).
[14] Thermax Ltd v. Schott Industrial Glass Ltd, [1981] F.S.R. 289 (Ch. D.).
[15] Ibid. at 294.
[16] Harris Scientific Products Ltd. v. Araujo, 2005 ABQB 603 (CanLII).
[17] Ibid. at para. 103.
[18] Ibid. at para. 105.
[19] CIBC World Markets Inc. v. Genuity Capital Markets, 2005 CanLII 3944 (ON S.C.).
[20] Ibid. at para. 3.
[21] Persons connected to the defendants were entitled to review the information in order to assess whether to advance claims of privilege.
[22] CIBC World Markets v. Genuity Capital Markets, 2006 CanLII 11908 at para. 5.
[23] BMG Canada Inc. v. Doe, 2005 FCA 193 (CanLII).
[24] Ibid. at para. 44.
[25] Irwin Toy Ltd. v. Doe, [2000] O.J. No. 3318 (S.C.) (QL).
[26] Ibid. at para. 11.
[27] Grenzservice Speditions Ges.m.b.H. v. Jans 1995 CanLII 2507 (BC S.C.).
[28] Ibid. at para. 116.

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